Creating A Better Trader: THE NEXT BEST OPPORTUNITY (NBO) TRADER.
Trading can be a very emotional undertaking. Money-making trades can be enthralling, frustrating, and disappointing as we try to manage the trade.
Many look to hold winners until every bit of juice is squeezed out of them. Pretty natural behavior as “We like to win”, and we want to bask in the glow a bit.
The over-emphasis on the entry being successful naturally fill us with pride and gets us a bit away from why we are here.
That being: To do the best to most often be in a position for high probability of the trade moving in our direction with a large plentiful profit zone.
But money has time and opportunity costs with it as well. Staying in a position beyond its expected life may put us in a situation where that trade has lost its edge for the amount of resources dedicated to it.
Often, (and more often than we want to admit) it is a higher probability for profits to exit a position, and get into one that has more profit zone ahead of it. That, indeed, is the NBO – The Next Best Opportunity attitude of trading.
Let’s examine the core of How Investors and Traders EXCEED their goals?
- They manage risk.
- They don’t waste time.
- They act when opportunity knocks.
- They follow a consistent process supporting all three.
That’s it! That is all there is to it. Seems simple enough.
All are key, and 2 and 3 don’t get enough attention.
Being in a position that has consumed much of the profit zone is an inefficient use of the asset when there are many more opportunities.
Being in a position to act of the higher probabilities with greater profit zones is the edge we need to strive for.
A key component of this is simply being ready by making sure you are not locked into tired or fatigued positions, and to do that, we need to be ready to declare it is time to leave, with the confidence we know what to do next with the money.
How might you decide to get out of a trade/investment?
- Position has reached one or more of its target(s)
- Stopped out (targeted exit)
- Allotted Time has expired for the expected price move.
- A better opportunity for the asset ($$) arises. (NBO)
Confidence in the NBO – Next Best Opportunity:
Increasing the confidence to exit a successful (or failed) position should be fairly easy to accomplish as there are many (thousands) of opportunities every day in many asset types. It is extremely important to understand and feel this “in your bones”. Experience is key, and getting that experience can be done rather quickly.
The same care to identify and execute on trades can be taken regardless of security. Nothing is really “special” and deserves any “loyalty”. Easy to say, but it can be easy to feel as well with a more experience. Work hard to gain that experience (paper trading first of course).
The simple things you can do to do be ready for the NBO:
- Identify trades. Lots of trades. Different kinds of trades on different securities. It doesn’t mean you must take them all, but you will watch price action on your setups and realize they are all there, and no specific trade is “special”. If you are a futures trader – do this for all the futures. If you trade forex, do it for ALL forex pairs. If you are an options trader, do this for 100 stocks, etc…
- As you take a trade to “active”, immediately identify and measure the next trades you would MOST be interested in. Move on, and don’t overwatch or manage the trade. Of course for many it is easier said than done, but there, I said it, now do it.
- Focus on the future trade possibilities. Measure them with your own technique and likes and dislikes. Do this with your own methods that you are ready for. (This will help you also ignore the trade you enter and let it just do what it will do. The market really doesn’t change because you are watching it, but your trade might – due to your intervention. )
What does the NBO – Next Best Opportunity – Attitude do for you?
- Gain confidence to focus on Profit Zone as being #1 in your trade setups.
- Focused on only valuable activities and trades that the NBO provides.
- Reduces stress and anxiety.
- Gives you a more defined trade plan that doesn’t over-focus on making money.
- More efficient use of your dollars by getting them in play for the highest probability positions ALL THE TIME. Time value of your money respected.
- Acting when the opportunities are knocking.
- The consistent process is reinforced because it shows itself with pro-active behaviors.
- Build comfort that no minute, hour, day, week or month is any more special than any other. The trades will be there (and are there), and will be there in the future.
By always focusing on the Next Best Opportunity, you can not only be more prepared for your next trade, but you can keep yourself in higher-probability position choices, while respecting the important time value of your money as well.